US Dollar Weakens As Jobless Claims Slide to Six-Month Low, Consumer Spending Jumps

The US dollar is kicking off October lower as the number of Americans filing for first-time unemployment benefits fell to a six-month low and consumers continued to show some signs of life in August. Still, the greenback is poised for a noteworthy weekly gain against many of its major currency rivals, buoyed by uncertainty in the broader financial markets.

According to the Department of Labor, initial jobless claims increased by 837,000 in the week ending September 26, coming in below the market forecast of 850,000. This is the lowest reading in six months, but it does point to a slowdown in the labor market’s recovery.

It is also estimated that 650,120 people filed for claims under the Pandemic Unemployment Assistance Act, which is the federal law that allowed self-employed workers to be eligible for benefits. This would increase the number of new claims to 1.49 million.

Experts also note that California is complicating the actual figures. The problem is that The Golden State is not accepting new applications until later this month as it processes an enormous backlog and probes into allegations of widespread fraud. This is forcing the Labor Department to use the latest California jobs data.

Continuing jobless claims declined to 11.767 million in the week ending September 19, while the four-week average, which eliminates the week-to-week volatility, topped 867,000.

Last week, jobless claims totaled 873,000, continuing jobless claims hit 12.747 million, and the four-week-average came in below 880,000.

In total, more than 63 million Americans have sought jobless benefits.

In other data, consumer spending rose 1% last month, down from the 1.5% gain in July, according to the Bureau of Economic Analysis (BEA). This is better than the median estimate of 0.8%. Consumers spent more on food services, accommodations, and health care. Personal income fell 2.7%, worse than the market projection of -2.4%.

The personal consumption expenditure (PCE) price index edged up 0.3% last month, marking the fourth consecutive increase. The core PCE price index also advanced by 0.3% in August.

The US Dollar Index, which measures the greenback against a basket of currencies, tumbled 0.11% to 93.79, from an opening of 93.89. The index is poised for a weekly gain of 0.7%, lowering its year-to-date loss to below 3%.

The USD/CAD currency pair dropped 0.11% to 1.3308, from an opening of 1.3325, at 13:34 GMT on Thursday. The EUR/USD climbed 0.18% to 1.1743, from an opening of 1.1721.

© AndrewMoran for Forex News, 2020. |
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Post tags: Consumer Spending, Dollar, EUR/USD, Inflation, Jobless Claims, PCE, Personal Income, United States, US Dollar Index, USD/CAD

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